What’s Romney thinking?
Mitt Romney is hitting President Obama hard on America’s weak job performance over the past two and a half years.
Yet Romney himself has pledged himself to policies that will squeeze jobs in the near term, at least according to conventional economic theory.
He has endorsed the Cut, Cap, and Balance Act for large, early federal spending cuts: no more fiscal stimulus. Yesterday he put himself on record in opposition to any more monetary stimulus.
How to reconcile these positions?
Four possible answers.
1) Romney has become a true believer in the “confidence” theory of job creation. Unemployment remains high (according to this theory) because big government and loose money detract from business confidence. By cutting spending and tightening money, we can restore confidence and inspire business to hire again. This theory has been endorsed by many Republicans including Speaker Boehner. Maybe Romney has joined the crowd?
Problem with Answer 1: Romney just seems too damn smart to believe something so at odds with reality.
2) Romney is a total cynic. He will say whatever he needs to say to win the GOP nomination. Then he will say whatever he needs to say to win the general election. He’ll worry later about how to fix the economy: first he has to clinch today’s sale.
Problem with Answer 2: Romney has had painful experience with how hard it is to escape later the promises made today. He’s still dogged by his pro-choice commitments of 2002. Would such a careful planner volunteer for the risk that he’d enter the presidency burdened by commitments that doomed him to economic failure?
3) Romney expects the economy to have already turned around by itself by 2013. He’s already taking up what he genuinely believes are the appropriate policies for a period of recovery.
Problem with Answer 3: The economy has been growing since 2009. At the current pace of job creation, we still would not have reached anywhere near full employment by the time a President Romney faced re-election in 2016. An early adoption of contractionary policies would only make his own job harder.
4) Romney expects the Republicans to lose the House of Representatives in 2012. Romney’s commitments to fiscal austerity, whatever their inherent lack of merit, will give him negotiating leverage to resist a House full of Democrats demanding big New Deal job creation programs.
Problem with Answer 4: It just seems too complicated a plan, even for Romney.